Most business leaders know that high-quality Customer Experience (CX) programs demand constant improvement and evolution. Moreover, well-tended CX departments and outsourced, specialized Customer Experience teams also logically lead to increased rates of customer loyalty. Loyalty programs are not just as simple as making customers feel heard and appreciated. Customer loyalty has been proven to improve profitability and lead to revenue gains. In fact, a recent Bain & Company and Harvard Business School report concluded that “increasing customer retention rates by 5% increases profits by 25% to 95%.” Bearing this statistic in mind begs the question of what are the specific ways customer loyalty can help lead to not only customer retention/growth but also increased revenue? Let’s explore:
Loyal Customers will Invite you to their Communities
It is common sense that brand loyalists will spend more time interacting with the brands they cherish – both on their websites, but also these days on their social media. In turn, when a new product drops or a contest is announced, they will engage not only personally, but also share their enthusiasm with their social groups – friends, families. and coworkers. A great way to incentivize loyalty in this manner is to offer creative ways for fans to engage and feel personally connected with your brand. This may be through contests that encourage customers to send in their ideas, or better yet images engaging with your product or brand in some matter.
Beyond this, positive experiences will lead to old-fashioned word-of-mouth referrals. In fact, according to research from Temkin Group, 77% of customers polled say that they would recommend a brand to a friend after just one single positive experience with said brand.
Customer Loyalty Can Reduce Churn
According to the 2018 Bond Brand Loyalty Report 77% of consumers say they are likely to stay with a brand that has a loyalty program. This leads to a reduction in customer churn, a very real threat in 2023 as the e-commerce market is continually flooded with new brands and products on a seemingly daily basis. This churn reduction can lead to large increases in profitability for brands that do it methodically and strategically. One simple and straightforward way of doing this is by having a customer loyalty program that goes above and beyond the expected. Also, personalizing interactions can go a long way and lead to a general overall good-feeling customer experience.
Loyal Customers will Become Advocates for Your Brand Values
By weaving in your brand’s mission and values with your Customer Experience, you can show that your customers matter to you. Beyond your product and service, you want your customers to feel that you are holistically invested in their satisfaction. This sometimes means taking a stand on issues that arise in the headlines that pertain to your industry. Sometimes these issues may not even pertain to your business directly but DO pertain to a large part of your customer base. Take the time to get to know your customers’ values and in turn educate your community on your brand’s mission as well. This reciprocal act will increase engagement and in turn, be good for your overall business bottom lines.